Alberta, B.C. salvage deal on Gateway pipeline

James Wood, Calgary Herald11.04.2013

Premier Alison Redford and British Columbia Premier Christy Clark agreed on a framework for pipeline development on Tuesday, a day after it appeared talks had broken off.JONATHAN HAYWARD
/ THE CANADIAN PRESS

British Columbia Premier Christy Clark and Alberta Premier Alison Redford agreed on a framework for pipeline development on Tuesday, a day after it appeared talks had broken off.JONATHAN HAYWARD
/ THE CANADIAN PRESS

The Alberta and British Columbia governments reached a framework agreement on pipeline development Tuesday, with B.C. turning to the energy industry to provide the economic “fair share” it has sought from projects such as Enbridge’s Northern Gateway.

In the deal announced in Vancouver after seemingly falling apart a day earlier, Premier Alison Redford endorsed the five conditions that B.C. has imposed on potential bitumen pipelines to the Pacific Coast, including that the province receives an enhanced economic benefit because of its environmental risk.

In return, B.C. Premier Christy Clark agreed to back the Canadian Energy Strategy championed by Redford and disavow any designs on the increased royalties or taxes Alberta would receive from completed pipeline projects.

The deal stipulates Alberta agrees that B.C. has a right to negotiate with industry on appropriate economic benefits and that there will be no negotiations between the two provinces on the issue.

Speaking to reporters from Vancouver, Redford said the need for clarification around royalties and Alberta’s potential role in talks was the sticking point that had halted progress — a meeting between the two premiers was cancelled only to be restored — before an agreement was reached.

She said Alberta will take no role in the negotiations between B.C. and the industry but expressed confidence the two sides can reach a mutually beneficial arrangement.

“Premier Clark understands she was elected to build British Columbia’s economy, and she is very much looking to develop a relationship that meets her five conditions but is also business-friendly,” said Redford.

B.C.’s other four conditions for heavy oil pipelines are passing an environmental review, the creation of world-leading marine and land spill prevention and recovery systems, and addressing First Nations’ rights, but the economic issue has been the most contentious.

While the B.C. government says it has no formal proposal to bring to industry at this time, members of Clark’s government have mused about the possibility of some sort of toll or levy on the bitumen shipped through the line.

Redford said talk of a toll is only “speculation” and said it was too soon to say whether that could affect potential Alberta royalties from an operating pipeline, as suggested by the Alberta Federation of Labour on Tuesday. A levy could fall on the pipeline companies rather than the producers who pay royalties, she said.

But Dave Collyer, president of the Canadian Association of Petroleum Producers, believes that a toll “is ultimately a cost that more than likely will be borne by producers.”

“We’re concerned about how all of this translates into competitiveness,” he said, noting that CAPP had no “definitive view” on any of the options.

Collyer praised the agreement but said he is disappointed the Alberta government won’t take part in the negotiations between the industry and British Columbia, adding that Ottawa should be involved as well.

“We all need to look creatively at ways by which we can address the concerns B.C. has,” he said. “It’s better to have all the parties at the table trying to find a way through,” he said.

An oilsands pipeline to the coast is hugely important for Alberta to open the Asia market to provincial energy exports and boost prices. But both Enbridge’s proposed Northern Gateway pipeline and the proposal by Kinder Morgan to expand its existing Trans Mountain line have met fierce opposition in British Columbia because of environmental and First Nations concerns.

The two provincial governments entered a cold war over B.C.’s demands in 2012 but there has been a reconciliation since Clark’s Liberal government was unexpectedly re-elected earlier this year.

“It was terribly important that Premier Clark is in a position where she can be much more positive with respect to any project that allows for us to get our product to market,” Redford said of Tuesday’s deal.

At an earlier news conference with the two premiers, Clark said “there are a whole host of different possibilities” that B.C. could pursue to maximize a pipeline’s economic return.

“People have talked about a refinery in British Columbia, that could be 3,000 jobs and a lot of potential tax revenue for people of the province. The federal government is going to be garnering a huge amount of new revenue as a result of this. The companies themselves are going to have obviously significant profits as a part of it. So there are lots of different forms economic benefits can take,” she said.

Todd Nogier, spokesman for the Northern Gateway project, said Enbridge was encouraged the two governments had found common ground and the company was working to meet B.C.’s five conditions.

The province has said it cannot support the project at the current time over environmental concerns. A decision by the National Energy Board’s joint review panel on Northern Gateway is expected by the end of the year.

Nogier said the company would not comment on any of the possibilities, including a pipeline toll, to increase B.C.’s economic take from the project.

“We would have to look at each option as they came to us in terms of economic viability,” he said.

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